Word: nationalizes
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Dates: during 1970-1979
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Inflation has spread a financial virus of unwanted dollars to the economies of the nation's trading partners, turning the once mighty greenback into the sick man of international finance. Since 1970, some $650 billion has piled up in so-called Eurodollar accounts in banks overseas, and the threat is ever present that holders might stampede to sell their dollars. Since 1971, minipanics have led to the collapse of worldwide fixed exchange rates against the dollar, the slide of the dollar against gold and other precious metals, and the progressive disintegration of global confidence in the dollar itself...
...Federal Reserve Board over the years has jumped back and forth capriciously from tightening the nation's money supply in an effort to slow inflation, to running the printing presses full blast when the economy seemed in need of a lift. But its new chairman, Paul Volcker, seems committed to a more consistent and tougher policy. Last week the Fed lifted its discount rate, the amount that it charges for loans to commercial banks, from 10% to a record 10½%, suggesting that even in the face of a business slowdown the board is at last determined to halt the excessive...
...take care of itself once demand was stimulated. So long as inflation stayed low, that is in fact what happened. Even modest increases in consumer demand would bring quick jumps in output. So productive were U .S. plants and factories that they not only filled the needs of the nation's domestic market but also deluged the world with material abundance...
Between 1889 and 1970, the nation ran a trade deficit only once, in the midst of the Depression, in 1935. Yet since 1971, the combination of low productivity and high inflation has reduced both the supply and the competitiveness of U.S. products. Consequently, export growth has been sluggish, and foreign goods have poured into the U.S. at an ever increasing rate. Coupled with the nation's increasing dependence on foreign oil, this has meant that the U.S. has managed to eke out a trade surplus only twice since 1971, running up a cumulative deficit of $59 billion in those years...
...winters of 1977 and 1978, or for the weather of last year that cut into harvests in the citrus belt. Government economists also argue that price gouging by foreign oil producers is exogenous. True, but only partly so. Not only did inflation in the industrial countries encourage the 13-nation OPEC cartel to quintuple its prices in 1973-74, but the accelerating U.S. price spiral provides the cartel with its only excuse for raising its prices still higher...